Making Crypto Mainstream, Tokoin & KuCoin Launched OTC Desk Service: What Can Traders Expect?
While other over-the-counter (OTC) trading desks in Indonesia charge a fee from 1.5 to 7 percent, Tokoin and KuCoin launched one with no fee not long after KuCoin Mega Meetup Jakarta!
At the beginning of December, on the 7th, Tokoin co-hosted a Mega Meetup in Jakarta along with KuCoin, one of the global leading cryptocurrency exchanges. The purpose of this meetup was to welcome the KuCoin exchange to Indonesia and to discuss relevant topics in the crypto world. Two topics that were brought to the attention of the participants were: “The Future of Staking Services” and “How Exchanges Contribute to Blockchain Technology Innovation”.
In addition, participants of the event had the chance to witness Tokoin and KuCoin signing the Memorandum of Understanding. The MoU signing marked the in-depth partnership between Tokoin and KuCoin in maximizing the Indonesian crypto market and community.
KuCoin to Launch Indonesian OTC Desk
Now, the next step forward following the formal agreement between Tokoin and KuCoin is the launch of the OTC desk in the Indonesian market by the exchange. To be more specific, KuCoin is looking to present an Indonesian Rupiah (IDR) OTC service on its OTC trading desk.
In Indonesia alone, OTC desks do exist, both unofficial and official ones. However, for the unofficial ones or also known as peer-to-peer, the fee they charge range from 6 to 7 percent, while the official ones have a fee of 1.5 to 3 percent. This OTC trading desk which results from Tokoin and KuCoin’s continuing partnership after the meetup, comes with no fee.
The key purpose of building the OTC desk in Indonesia is to improve cryptocurrency and blockchain application cases and advance payment methods for the local crypto community. Additionally, the OTC desk will ensure a more secure and convenient deposit experience for crypto enthusiasts in Indonesia.
In detail, the brand-new OTC desk will support the following cryptocurrencies: BTC, USDT, and ETH. It will feature a free-taker fee and a bank transfer receive payment method.
Now, to understand the difference between trading on KuCoin cryptocurrency exchange and its OTC trading desk, it is necessary to understand the difference between these two methods of trading.
OTC Desk vs Exchange: What Are the Differences?
By definition, Over The Counter (OTC) market refers to a decentralized market for unlisted securities wherein trading happens via communication by phone, email, network platforms, etc. OTC trading, also called off-exchange trading sometimes, is not tied to any specific physical location and features standardized contracts.
Trading on the exchange implies the usage of a centralized and regulated market, where assets of listed companies are traded. Prices of the assets are determined by market supply and demand forces.
Talking about the key differences between OTC and exchange trading, there are a lot of them. Let’s look at the most important ones.
- Market maker
In the OTC market, the dealers are the ones playing the role of market makers. They are responsible for quoting the price for assets that are traded between the participants.
In the case of an exchange trading, the exchange itself is the market maker and the prices are set by supply and demand forces, as mentioned above.
2. Decentralization vs central authority
In the over the counter market, decentralization is the key principle, implying that there is no central authority overlooking the transactions — participants are communicating with each other by means of network or phone. The dealer is responsible for pairing buyers and sellers based on the number of crypto assets that are held by participants.
With exchange trading, there is a central organization that hosts a market, allowing assets to be traded between buyers and sellers. The communication is happening via one central platform and is overseen by an authority.
One of the major differences between OTC and exchange cryptocurrency trading lies in the principle of anonymity. With OTC desk, buyers and sellers can exchange vast amounts of crypto anonymously, after being paired by a dealer. In fact, OTC dealers do not provide public books that list all the trades.
With the exchange cryptocurrency trading, the trading platform creates a book of orders from different sellers, where it presents all trade orders from the cheapest to the highest price. In the case of large orders, other traders are aware of the trade, since the price of an asset is affected. In the case of OTC trading, anonymity allows for avoiding unwanted price movements.
Normally, the liquidity of cryptocurrency exchanges is volatile and often low. This makes it hard to exchange large amounts of crypto. For instance, if a large order is included in a centralized exchange’s public order book, it will most likely take some time to get filled at the desired price. The order might be broken down into smaller orders at different prices, which leads to price slippage.
OTC desks are able to fill large orders almost immediately at the price requested by matching buyers and sellers.
As discussed in the previous point, slippage is one of the differences that are related to OTC vs exchange crypto trading. Slippage refers to the difference between the price a trader expects on trade and the price that he/she actually gets. On an exchange, different sellers are quoting different prices for their coins, so when the order is placed, the difference in price between orders happens, which leads to slippage.
In an OTC desk, everything is sold at one rate, which allows avoiding slippage.
What Are the Benefits of an OTC Desk?
To sum up, OTC desks are perfect for facilitating large order trades between buyers and sellers due to their decentralized nature. Thanks to dealers pairing buyers and sellers, trades are happening much faster and are filled at the desired price.
OTC desks are often more flexible and convenient when it comes to trading large amounts of cryptocurrency. The fees charges by OTC desks are also normally lower than those of cryptocurrency exchanges. Another advantage for cryptocurrency traders is the ability to trade cryptocurrencies by using fiat.
With KuCoin OTC desk in Indonesia coming up, users will get an exclusive chance to quickly trade their IDR for BTC, ETH, or USDT and vice versa. To facilitate easy and hassle-free trading, KuCoin help center provides guides on how to buy and sell digital assets on the OTC desk.
For those who are new to KuCoin, it will be useful to learn about how to get started on the exchange here.